News
AI Could Break Insurance's Two-Decade Growth Stalemate, McKinsey Says
Artificial intelligence has the potential to reshape distribution, underwriting and productivity in ways that decades of digitization never did, according to McKinsey & Company.
Artificial intelligence may finally break insurance’s two-decade pattern of rising premiums without matching profit gains, according to an article by McKinsey & Company, as reported by Risk & Insurance.
The big picture:
Prior waves of digitization reshaped other industries but left insurance’s core economics largely untouched. McKinsey argues AI is different because it can simultaneously address the industry’s fading relevance, costly distribution model, stagnant productivity and slow pace of change. That combination could mark a structural break from 20 years of flat profitability.
By the numbers:
- Premiums grew roughly 4.9% annually since 2005, reaching an estimated $8.3 trillion in 2025.
- Profits lagged, rising only about 4.3% annually to roughly $580 billion.
- Cost ratios climbed 10% globally since 2005, even as other sectors cut theirs.
- AI leaders outperformed, generating six times greater shareholder returns than laggards.
GM is quietly becoming a subscriptions company
General Motors' OnStar generated $800 million in the last quarter — and the automaker expects to make billions more this year.
General Motors has been pulling a Tim Cook and boosting its software and subscription business.
During the automaker's Tuesday earnings call, executives highlighted the rapid growth of OnStar and Super Cruise, its two most popular software services.
Subscriptions are increasingly important to automakers. Unlike a car sale, which happens only every few years, they can keep bringing in high-margin revenue long after a customer drives off the lot.
GM says its software business keeps roughly 70 cents of every dollar it brings in. That's a rare level of profitability in the auto industry, as many car sales generate just four to 10 cents per sales dollar.
Financial Results
Hartford Q2 profit rises 31% on tax benefit, investment income - Business Insurance
The Hartford on Thursday reported second-quarter profit of $1.29 billion, up 31% from the same period last year, boosted by a tax benefit tied to an agreement to sell Hartford Funds and higher investment income.
“The current market conditions highlight the importance of underwriting discipline, pricing rigor and risk selection,” Chairman and CEO Christopher Swift said during Friday’s earnings webcast. “In business insurance, a diversified portfolio, strong distribution relationships, disciplined underwriting and technology-enabled execution continue to drive profitable growth at attractive returns.”
Hartford posted its results after markets closed Thursday. Core earnings totaled $945 million, up 1% from $932 million in the year-earlier quarter, while core earnings per diluted share increased 6% to $3.42.
The commercial lines combined ratio worsened to 91.4% from 87.0% in the second quarter of 2025. Its underlying combined ratio increased 1.3 percentage points to 89.3%.
Munich Re's Q2 profit of €2.2bn puts full-year target firmly within reach
With €3.9 billion secured in the first six months - 62% of the full-year goal already banked - the question is no longer whether Munich Re hits €6.3bn, but by how much it exceeds it
Munich Re has reported a preliminary net profit of approximately €2.2 billion for the second quarter of 2026, significantly exceeding the analyst consensus estimate of €1.786 billion for the period and pushing the group's half-year result to approximately €3.9 billion.
The Q2 result was driven by strong operational performance and very low major-loss expenditure in property-casualty reinsurance - a pattern that also characterised the first quarter, when Munich Re posted a net result of €1.714 billion, up 57% year on year from €1.094 billion, according to the group's Q1 2026 quarterly statement. Combined, the two quarters have secured approximately 62% of the full-year net result target of €6.3 billion with half the year still to run - a target set in December 2025 under the group's Ambition 2030 strategic plan.
Selective Insurance Balances Profit Gains With Growth Strain
Selective Insurance’s latest earnings call painted a cautiously optimistic picture, blending robust profitability and investment gains with clear acknowledgement of top-line and casualty headwinds.
Management underscored an eighth straight quarter of double-digit operating ROE and strong investment income, while openly flagging slower premium growth, weaker new business volumes, and elevated commercial auto frequency as near-term constraints.
Underwriting Profit and Combined Ratio Improvement
All insurance segments generated an underwriting profit, and the company reported a GAAP combined ratio of 98.0% despite 5.6 points of catastrophe losses. The combined ratio improved by 2.2 points versus the prior year, underscoring progress in pricing, risk selection, and portfolio reshaping even as certain casualty lines remain under pressure.
Climate/Resilience/Sustainability
Why El Niño’s Promise of Quieter Hurricane Season May Not Be Good News for Insurers
For insurers, the periodic El Niño climate phenomenon has traditionally lowered the risk of costly Atlantic hurricanes, but decades of population growth along coastal areas and rising property values are forcing them to rethink that assumption.
Marked by warmer-than-average sea surface temperatures in parts of the Pacific Ocean, El Niño typically suppresses Atlantic hurricanes by creating atmospheric conditions that make it harder for storms to form.
U.S. government scientists said El Niño arrived in June, which was also the start of the Atlantic hurricane season. They expect a below-average season in 2026 of eight to 14 named storms and one to three major hurricanes. CONTINUES
AI in Insurance
Agentic AI Reshapes Property, Casualty Insurance Operations
Property and casualty insurers worldwide are redesigning operations around AI-enabled decision workflows and adaptive operating models, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.
The 2026 ISG Provider Lens® global Insurance Services – Property and Casualty (P&C) BPO report finds that insurers are shifting automation from process-focused operations to decision-centric models as they deploy agentic AI for underwriting, claims and customer service tasks. Rather than replacing existing core systems, many organizations are modernizing through orchestration layers that connect legacy platforms with AI-based systems, allowing them to improve operational performance while minimizing implementation risk and disruption.
"Property and casualty insurers are applying AI where it can automate business decisions without the need for top-to-bottom transformation," said Dennis Winkler, director, Insurance, at ISG. "Organizations are combining agentic systems with human expertise to improve efficiency while preserving the judgment required for complex underwriting and claims activities."
Enterprises are redesigning insurance operations to handle growing workloads without proportional increases in headcount. Many are using agentic AI for routine workflow segments, including pre-bind submission triage and early-stage claims processing, allowing skilled employees to focus on complex evaluations and customer interactions. This approach improves productivity while helping insurers manage higher claim volumes and surge events that make capacity planning difficult.
Guidewire (GWRE) Adds AI Veteran To Its Board As Germania Deploys ProNavigator
Guidewire Software, a core systems and cloud provider for property and casualty insurers, is moving further into embedded AI with these developments. The appointment of Dr. Alexander Vollert, known for AI focused work in insurance, and the rollout of ProNavigator at Germania Mutual highlight how the company is aligning its board and product suite with ongoing digital change in the sector.
For investors tracking NYSE:GWRE, this combination of boardroom expertise and in market AI deployment points to deeper integration of data driven tools across Guidewire's platform. As insurers weigh modernisation options, these steps may influence how the company positions its software, partnerships and product roadmap relative to peers that are also experimenting with AI embedded workflows
Hippo Rolls Out Claude and Other AI Tools Company-Wide, With 90% Employee Adoption in First Month
Hippo Holdings Inc. (NYSE: HIPO), a technology-native insurance group, today shared early results from a company-wide deployment of AI tools, including Anthropic's Claude, that has extended AI adoption to every function across the business. The rollout marks the next step in the company's goal to empower its entire enterprise with AI.
In the first 30 days, more than 90% of employees reported using Claude and Hippo's other AI tools, with 86% reporting use multiple times per week and 60% using them daily, according to an internal employee survey. In the same survey, 60% of employees reported saving two or more hours a week and 20% reported saving five to ten hours weekly. Sixty-five percent cited using AI as a thinking partner as a top benefit, and 58% said it helped them take on tasks they normally wouldn't have attempted.
"Following strong results from our AI deployments in service, claims, and software development, we have now extended AI tools to all employees," said Kyle Ramsay, Hippo's Chief Product and Artificial Intelligence Officer "The adoption, daily usage, and efficiency employees are reporting are strong signals of the transformation taking place at Hippo. These results speak to more than the technology itself — they reflect the training and connectivity we built to cultivate a workforce empowered by AI."
InsurTech/M&A/Finance💰/Collaboration
InvoiceCloud and BlitzenX Partner to Modernize P&C Insurance Billing and Payments
InvoiceCloud and BlitzenX have formed a strategic partnership to modernize insurance billing and payments for P&C carriers. By integrating InvoiceCloud’s AI-driven EBPP platform with BlitzenX’s systems expertise, insurers can now streamline digital disbursements, improve policyholder engagement, and accelerate core system transformations through a unified, consumer-grade digital experience.
How Does the InvoiceCloud and BlitzenX Partnership Improve Insurance Billing and Payments?
The collaboration addresses the growing need for insurance billing and payments modernization by merging high-tech payment software with deep systems integration. Carriers can now deploy AI-embedded payment platforms that sync directly with existing core policy and billing systems, reducing the friction typically associated with legacy upgrades. This integration ensures that real-time payment reconciliation occurs automatically, keeping financial data accurate across all administrative departments.
Mapfre announces an agreement to acquire Safety for $1.54bn, expanding its leadership across the US Northeast - Mapfre
Mapfre S.A. ("Mapfre") today announced that Mapfre U.S.A. Corporation (“Mapfre USA”) has entered into a definitive agreement to acquire Safety Insurance Group, Inc. ("Safety"), a leading property and casualty insurer with a leading position in Massachusetts and a presence in a number of states throughout the Northeast. This all-cash transaction, valued at $1.54 billion, represents a significant step in Mapfre’s global growth strategy.
The acquisition builds upon Mapfre USA’s market-leading position in Massachusetts and underscores the company’s commitment to strengthening its presence throughout the Northeast.
Claims
Smart Glasses Transform Insurance Claims, Inspections | Insurance Thought Leadership
One of the greatest challenges facing insurers is making sure that every claim is documented consistently, regardless of who is performing the inspection or where it takes place. Smart glasses offer a clear path to standardizing this process by relaying information, guidance, and documentation tools directly within the wearer's field of view.
Rather than relying solely on handwritten notes, memory, or photos taken after an inspection, smart glasses enable adjusters and field representatives to capture POV evidence in real time while following predefined inspection workflows. Step-by-step prompts, often oral, help ensure that required photographs, measurements, and observations are collected in the same order and according to the same standards across every inspection.
The result is greater transparency for insurers, policyholders, and auditors alike. Claims files become more complete, inspection procedures become more repeatable, and documentation is captured as events occur rather than reconstructed later. This not only improves confidence in claim decisions but also creates a stronger evidentiary record should questions arise later in the claims process.
As AI capabilities continue to mature, AI smart glasses can also assist by identifying missing documentation, recognizing objects or damage patterns, and helping ensure that inspections meet established company guidelines before they are submitted.
Matt Margolis is VP of business development and strategic relationships at Vuzix.
Legal System Abuse/Social Inflation
Florida reforms cut litigation in half
Florida share of homeowners' insurance-related lawsuits in the United States fell from 79% in 2020 to 41% in 2025, according to a new report from the Florida Office of Insurance Regulation.
The drop is likely due to legislative action the state took in 2022 and 2023 that targeted legal system abuse. Two landmark tort reform packages included provisions such as the elimination of one-way attorney fees, which required insurers to pay a plaintiff's legal fees; a shorter statute of limitations; and stricter standards for "bad faith" lawsuits.
In the first half of 2026, Florida saw a 25% year-over-year decline in personal residential lawsuit filings. It saw a 23% reduction in 2024 and a 25% reduction in 2025.
Average defense and cost-containment expenses per litigated claim are down 24%, from $947 in 2022 to $720 in 2025.
The report also found that Florida's domestic residential insurers had an 83 combined ratio last year, their best underwriting performance in over a decade. And average premiums fell in 51 of 67 Florida counties in the first half of the year.